+2 votes
by (1.3k points)
This is probably a really stupid question and I think I know the answer but I've thought about it so long that I've confused myself. In July we will have a extra $500 a month (in the grand scheme of things that isn't a huge amount but it's something. ). We just bought a new Sequoia and have paid most of it off however I'd like to have the entire thing paid off by next summer. So, do I add that $500 extra to the principal each month or do I put it into my savings and pay it off in one lump sum? Is there an advantage to paying it month instead of one lump sum? I was under the impression I should do it monthly to save on interest (which is only 4%) but then my friend and I were talking and she said "No, the interest is already added in for your entire loan so I'd just make one lump sum. " So now I'm super confused even though I think I'm right, can someone confirm?  
This is probably a really stupid question and I think I know the answer but I've thought about it so

2 Answers

0 votes
by (14.5k points)
Pay it each month to principal. You are paying interest on the truck and can’t get that much interest holding on to it! Yay for you! You will hv it paid off in NO TIME❣️
0 votes
by (2k points)
It depends on the loan? If it's a simple interstate loan you interest is accruing daily.  
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